New era in interest rate managament in Turkish capital markets

A new asset class is added to the VIOP multi-asset risk management platform. Overnight Repo Rate Futures contracts will start trading on Borsa İstanbul Derivatives Market (VIOP) on October 21, 2015. Overnight Repo Rate Futures contracts, based on the compounded rate of value weighted average

of daily overnight repo rate traded on Borsa İstanbul Interbank Repo-Reverse Repo Market, with a daily average volume of 13 billion USD, will be of two types; monthly and quarterly.

Both monthly and quarterly overnight repo rate futures are cash settled in Turkish Lira with a central counterparty clearing (CCP) service provided by Takasbank. Total of four maturity months of Monthly Overnight Repo Rate Futures contracts will be traded at the same time. Quarterly Overnight Repo Rate Futures Contracts will cover a period of two years with a total of eight quarters.

Borsa İstanbul Executive Vice President Çetin Ali Dönmez pointed out the fact that Overnight Repo Rate Futures will allow institutional investors to manage their short term interest rate risks, filling a significant gap in this field, and said, “Overnight Repo Rate Futures are, at the same time, instruments that can be used as benchmark in the floating leg of Turkish Lira denominated interest rate swaps. We offer significant cost advantages for market makers of Overnight Repo Rate Futures contracts which play an important role for the stability of the financial system. We are negotiating with potential market makers in order to ensure the availability of on-screen liquidity as soon as possible”.

Borsa İstanbul Head of Derivatives Market (VIOP) Muammer Çakır said,“FX derivatives at VIOP have become as liquid as index contracts in the last couple of years. By adding another Treasury product in our product portfolio, we are taking a determined step towards creating an efficient and liquid risk management platform for managing all kinds of risks. With this vision, we are pleased to launch Overnight Repo Rate Futures, through which, particularly banks, mutual funds and financial institutions can manage their short term interest rate risks with central counterparty clearing service”.

Borsa İstanbul Derivatives Market (VIOP) is the region’s leading and most liquid derivatives marketplace where the investors and corporates come to manage their risk. VIOP offers the widest range of regional benchmark products across all major asset classes, including futures and options based on equity indices, currencies, interest rates, precious metals, commodities and energy with a central counterparty clearing service.